The Tribune

• New regulatory framework took effect April 2

• Two weeks before tariff hike announcement

• And month before yesterday's GBPA approval

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Grand Bahama businesses and residents yesterday said it was "amazing" that the island's new water regulatory regime appeared to have been implemented almost two weeks before they were warned of imminent rate hikes.

Speaking to Tribune Business, after the Grand Bahama Port Authority (GBPA) confirmed it had approved the rate increases sought by its Grand Bahama Utility Company affiliate, they said this calls into question whether there was any real intent to have a true public consultation on the issue or properly account for consumer concerns.

GB Utility's new regulatory regime, which is posted on the GBPA's website, states at page two that "this operating and regulatory framework agreement [is] made effective as of the 2nd day of April, 2023". That appears to confirm that the regime took effect almost two weeks before the water supplier's customers were first informed of the impending rate increases, and new tariff structure, and one month before the GBPA gave its approval for the hikes.

The agreement, which was signed by Ian Rolle, the GBPA's president, and Philcher Grant-Adderley, for GB Utility in her capacity as the latter's chief operating officer, also refers to the water supplier's Board of Directors passing a March 30, 2023, resolution in relation to the new regulatory framework on the page carrying their signatures. It is not totally clear when the agreement was signed, but it appears to have been between March 30 and April 2, 2023.

As previously reported by Tribune Business, the GBPA is effectively regulating itself in this whole saga because GB Utility is owned by its affiliate, Port Group Ltd. Both the GBPA and Port Group Ltd have common shareholders, namely the Hayward and St George families, thereby creating a major 'conflict of interest' that has drawn considerable scrutiny from a cross-section of Bahamian society.

However, the dates on the regulatory framework agreement yesterday sparked questions as to whether approval of GB Utility's water price hikes had been pre-determined. And there were also queries over whether public consultation - which in any event did not take place via a formal Town Meeting or any traditional mechanism - would have had merit or value as a result.

Darren Cooper, proprietor of D's Car Rental, told Tribune Business that the now-approved rate increases will hurt the largest water consumers - hotels, restaurants and laundromats - the most. Some of that increased cost will likely be passed on to consumers, but he added that he understood the need to ensure GB Utility secures the island's water supply.

However, Mr Cooper voiced unhappiness that GB Utility had not engaged in public consultation or sought to justify the rate increases that will impact 60 percent of its customer base. This, he added, had made him "very disheartened and very disillusioned" as a Freeport businessman and resident.

"I think any added cost to businesses in Grand Bahama continues to be a concern. I think the greatest impact is going to be on our hotel operators, and those that use the large quantities of water - laundromats, restaurants and hotels," Mr Cooper said.

"I would still like the GBPA to justify the $8; why $8 [increase for higher consuming residential customers], but I understand that if nothing's done to protect the water supply of Grand Bahama we could be challenged in the future.

"Yet it's very disappointing to see the GBPA tell themselves 'yes' but no public consultation, no public meetings, no nothing..... just a press statement that we've requested an increase to the regulator of ourselves, and less than two weeks' later approval is granted. I expected a little more dialogue from the GBPA and GB Utility. It doesn't matter what security they're seeking to do, the people affected should be consulted and some justification given."

Informed by Tribune Business of the date when GB Utility's new regulatory regime took effect, Mr Cooper said it appeared that the water tariff hike was "approved long before they notified the public. They should have said a request had been made, and approval given, rather than make it appear some consultation was being done when there was none. Sad."

The business proprietor said he had spoken to Ms Grant-Adderley, GB Utility's chief operating officer, in relation to his water supply around the time the proposed rate increases had been announced and she "promised they would have public dialogue in reference to this water matter".

The GBPA's statement yesterday said the water rate increase will take effect in all consumers' June bills, although the utility has previously pledged that 40 percent of its customer base - those using the least volume of water - will not suffer any hikes.

But Pastor Eddie Victor, head of the Coalition of Concerned Citizens (CCC), yesterday told Tribune Business it "speaks volumes" that GB Utility's new regulatory regime appeared to have taken effect before the rate increases were even announced or approved.

"It means they had already planned to approve it," he argued. "When you already plan to approve it, you are only going through a process of public consultation to be able to say you did it. I think it's self-explanatory. There was no true public consultation. There was none. They call it public consultation, but it was just procedure to be able to say you did it."

Pastor Victor also questioned whether GB Utility can increase tariff prices for consumers outside the Port area, in east and west Grand Bahama as well as Freeport's surrounding settlements, without first obtaining the Government's approval. And he also urged businesses and residents to respond to the cost increases by digging their own wells if they can afford to do so.

"It's going to have a further adverse effect on the economy, taking into consideration they are increasing the water rates at a time when everything has been increasing in terms of consumer items and services," he added. "All that is going to do is add further hardship to the economic condition of businesses and individuals. That's the unfortunate thing.

"When you create an environment an environment that increases the cost of doing business, that cost is going to be passed on to customers and they will have less revenue to function with. When you have the Government, shipping companies and utilities all increasing their fees and the cost of goods, the end result is that the consumer, the citizen is impacted. That's the shame about it."

Kwasi Thompson, the east Grand Bahama MP, was also unimpressed. Describing himself as "disappointed but not surprised" by the rate increase approval, he added: "We anticipated, given the obvious conflict of interest, it was impossible for the GBPA to fairly and transparently assess a company with the same shareholders.

'Unfortunately, there has not been any attempt to change course or include anyone in the process in an attempt to make this process more transparent." Questioning who sat on the GBPA's rate review committee, he argued there had been "complete silence" from the Government as to whether it had sought to intervene and he again called upon it to act.

The GBPA yesterday sought to soften the blow for Grand Bahama consumers and business by announcing that GB Utility will pay penalties if it fails to meet certain customer service standards, which will be levied via credits to their accounts.

The four standards named in its statement were connecting new services to GB Utility's existing infrastructure, which has to be done within three working days; responding to customer complaints, billing and payment inquiries and work orders within 21 working days; the reconnection of disconnected accounts within one working day, subject to payment that includes the reconnection fee; and defective meters repaired and/or replaced within 30 working days.

Should these targets be missed, in each case residential customers will receive a $15 credit; commercial customers $30; and large customers a $75 credit. The GBPA statement said this was part of the rate application increase's approval, yet the same standards and penalties/credits are detailed in the regulatory framework agreement that took effect on April 2, 2023, again suggesting this was pre-determined.

Still, touting the regulatory framework agreement, the GBPA said: "The application was based on the cost-of-service model in line with international best practices. As part of the process, GBPA has made public on its website the regulatory framework that GB Utility is to be governed by.

"With the publishing of this innovative framework agreement, GB Utility is the first and only water company in the country to be regulated by an agreement that documents how rates are to be set, operating and environmental protocols and establishes customer service standards with penalties to be paid to customers."

Freeport's quasi-governmental regulator continued: "The GBPA regulatory committee reviewed the application, taking into consideration the concerns expressed by residents and stakeholders to balance the customer needs with having a healthy utility that can provide quality and sustainable service.

"As part of the formal response to the utility, GBPA has sanctioned the following customer service standards that GB Utility will be held accountable to its customers and regulators. If GB Utility fails to meet any of the service standards, customer water accounts will be credited."

The GBPA then sought to justify the approval decision, saying: "On May 1, GBPA communicated its approval to GB Utility of the application to be made effective in June bills. GB Utility, in their application where 40 percent of customers will see no change in their bills, has been approved to commence with proposed capital investment plans that include the construction of a 1.5m gallon a day mobile reverse osmosis plant to begin construction this year.

"This is in addition to the recently constructed three million gallon-a-day reverse osmosis plant that was commissioned in 2021. GBPA is cognisant of the catastrophic impact of Hurricane Dorian on the utility company and, specifically, that the utility lost 60 percent of its potable water supply because of Hurricane Dorian and the 20-foot surge of seawater that flooded their biggest water plant.

"The new reverse osmosis plant is critical to the ability of GB Utility to resolve the lower pressure being experienced by customers because of the diminished freshwater lens. It is also necessary to ensure that Grand Bahamians will continue to have access to a long lasting and sustainable supply of potable water, which is integral to the standard of life for the island," it continued.

"GBPA understands fully the importance of ensuring that this island has access to a consistent and quality supply of potable water that meets World Health Organisation (WHO) guidelines. We are cognisant of the critical role of water in our everyday life and future development. We act in accordance with best practices and industry standards to balance the needs of customers, protect our natural resources, and ensure we have a sustainable and storm resilient utility."

GB Utility, in its rate increase application, pledged that 40 percent of its customer base - those who use 2,000 gallons or less per month, and are likely to be lower income residential users - will not see any price hikes from the adjusted tariff structure that is due to take effect on May 1 if approved by the GBPA. Average consumption among this group is 600 gallons per month, and the average bill is forecast to remain at $12.83.

The water provider, in a statement, said a further 47 percent of clients - who consume between 2,001 and 10,000 gallons monthly - will only see an $8.16 per month tariff increase that will take their average bill from $28.13 to $36.29. This equates to an annual water cost increase of $97.72 - less than $100.

GB Utility is clearly expecting large volume users, namely higher income residents and the business community, to bear the brunt of the increases. Those consuming between 10,001 and 20,000 gallons per month, and representing 8 percent of the customer base, will see their bills rise by around $20.73 per month - representing a jump from an average $71.42 to $92.14. This is equivalent to a $248.76 annual increase in water costs.

Users of more than 20,000 gallons per month, chiefly hotels and Freeport’s large industrial companies who comprise 5 percent of customers, will see their tariffs jump by $125.74 per month to an average $558.67 compared to the present $432.93. This is equivalent to a $1,508.88 annual increase.